The Financial Conduct Authority (FCA) has banned a former trader on UBS's exchange-traded funds (ETF) desk for failings related to the bank's huge unauthorised trading loss in 2011.
John Christopher Hughes, who was the most senior person on the ETF desk at the time of the loss, is banned from performing any function in relation to any regulated activity in the financial services industry.
The losses, which totaled $2.3 billion (€1.6 billion), were by another trader, Kweku Mawuli Adoboli.
Part of the unauthorised trading involved creating and using an undeclared fund of profits, termed the “Umbrella”, which had the effect of manipulating the desk’s reported profit and loss. Hughes was aware of the Umbrella, did not consider it to be honest and knew that UBS would not have authorised it, the FCA says.
Tracey McDermott, the FCA's director of enforcement and financial crime, says in a statement: “[Hughes] should have been acting as a role model to others. Instead he failed to report the Umbrella and allowed the desk’s profit and loss to be misstated over an extended period. This failure contributed to Adoboli’s unauthorised trading continuing unchecked.”
Hughes should have reported the activity and his failure to had “catastrophic consequences”.
Hughes worked in the global synthetic equities division of the London branch of UBS between January 1 and September 14 in 2011.
Adoboli was sentenced to seven years imprisonment in November 2012 after being found guilty of two counts of fraud by abuse of position.
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